Gold Prices Close to New Highs

Gold prices settled at a new high Friday on technical buying and a strong safe haven bid.

NEW YORK ( TheStreet ) -- Gold prices were popping Friday on technical trading and signs that the U.S. economy is slowing, which prompted another flight to safety into gold.

Gold for August delivery settled $10.30 higher to $1,256.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,259.50 and as low as $1,241.60. The U.S. dollar index was slipping 0.51% to $85.32 while the euro was adding 0.39% to $1.23 against the dollar. The spot gold price Friday was popping more than $10, according to Kitco's gold index.

Gold prices made a run to conquer their previous record of $1,264 an ounce, on strong technical trading and safe haven buying, although prices stopped short of the $1,260 level.

Part of gold's move Friday was short covering and book squaring, which ramped up as the second-quarter came to a close. Also, headed into summer weekends, investors are opting for cash and gold as a safe place to put their money to protect themselves against negative headline news.

Another part of gold's rally was relief that the markets finally have the specifics on the financial regulation bill. A final bill is expected to be approved by Congress next week and by President Obama before July 4th. The big news for gold bugs was the fact that investment banks do not have to leave the gold business and will still be able to use 3% of their funds to trade the market. They'll also be able to use credit default swaps in "safe" assets like gold to hedge risk.

The final factor moving gold prices was risk aversion. The U.S.' first-quarter GDP number was revised down for a third time to 2.7%, indicating that the U.S. economy was growing much slower than expected.

"Bullion was higher on short-covering and technicals," says Jon Nadler, senior analyst at Kitco.com. "But participants were likely eyeing the GDP data with an expectation that risk appetite would suffer in its wake and that safe-haven plays were shaping up as the play of the day."

The popular gold ETF, SPDR Gold Shares ( GLD), added another 3.04 tons on Thursday as investors continued to buy the precious metal as the Dow Jones Industrial Average sunk triple digits.